PE Buyout Rumors Are Right—For Once

Look carefully, and there are deals out there: in energy, in retail, and in companies seeking to exploit the popularity of commodities.

1) Talk about right timing: ETF Securities will reportedly launch a new exchange traded product (ETP) for base metals, including copper and aluminum, as well as a basket of all six major base metals. No date set, nor where it will trade, but London is likely.

Getting an ETP for copper (and to a lesser extent aluminum) is a hot topic, and while it doesn't have the luster of gold demand for copper is huge worldwide. One issue: how to resolve high carry costs for the metal. The current ETF for base metals, PowerShares DB Base Metals Fund , is a basket of base metals but is based on futures contracts, which can have rollover issues. The ETF Securities products will reportedly be based on the cash markets.

2) Foreign oil companies invest big in U.S. onshore: we noted earlier, the first major investment by a Chinese company of U.S. onshore reserves when China's Cnooc (CEO) paid $1.08 billion for a one-third stake in Chesapeake Energy's Eagle Ford shale project in Texas.

What does China get out of this? The most important gain may be access to technology: "Clearly, if Asian companies can learn the nuances of shale exploration and bring the expertise back home, it would be a significant gain for them," CLSA wrote in a note this morning.

But there was a second deal in the same space: Talisman Energy , a Canadian company, has cut a deal with Norwegian oil giant Statoil for a 50/50 joint venture in the Eagle Ford shale as well.

3) For once, the rumors were right: Gymboree last week moved from $42 to $54, on rumors that it would be bought by a private equity company...which turned out to be right. Affiliates of Bain Capital will acquire all the outstanding stock of Gymboree for $65.40 per share, or $1.8 billion. That's a 50 percent premium to where it was trading at less than two weeks ago.

What was Bain thinking? Traders tell me that: 1) paying roughly 8 to 9 times forward EBIDTA was expensive, and 2) Bain can take a longer term point of view on the company and they can get a payback either by opening more stores to drive profits or by harvesting cash and waiting until multiples in the space improve.